Q: What do employers need to know about state and local pay transparency and salary equity laws?
A: Pay equity has been a hot topic for employers over the last few years and it continues to make headlines. Today, March 8, is International Women’s Day and March 15 marks this year’s “Equal Pay Day” – a date meant to symbolize how far into the year women must work to earn what men earned in the previous year.
So, now is a great time for employers to take stock of the various laws aimed at addressing pay equity. In particular, 2022 has seen the continuation of a trend where states and even cities are enacting or considering pay transparency laws, with many requiring employers to make broad disclosures about salary information to current, and sometimes even prospective, employees.
For instance, New York City recently announced a new law applicable to employers with at least four employees or independent contractors working in the city. Effective May 15, the law makes it an “unlawful discriminatory practice” under the New York City Human Rights Law for an employer to advertise a job, promotion, or transfer opportunity located in New York City without stating the “lowest to the highest salary the employer in good faith believes at the time of the posting” that would apply to the position. It is still unclear whether the law applies to remote jobs where the employer’s headquarters is based in New York City — further guidance is expected from the city in advance of the May effective date.
One of the more comprehensive recent wage transparency laws is Colorado’s Equal Pay for Equal Work Act, which took effect January 1, 2021. The law requires employers to share information about pay and position vacancies broadly, and specifically requires employers to (1) “make reasonable efforts to announce, post, or otherwise make known all opportunities for promotion to all current employees on the same calendar day and prior to making a promotion decision” and (2) “disclose in each posting for each job opening the hourly or salary compensation, or a range of the hourly or salary compensation, and a general description of all of the benefits and other compensation to be offered to the hired applicant.”
The law, which covers employers that have at least one employee working in Colorado, has a wide geographic reach. Specifically, among other things, internal position postings must include the required salary information if the job is either in Colorado or is a remote, or “work-from-anywhere” job (on the theory that it could possibly be performed in Colorado); and external job postings that are made online (meaning, they could possibly be viewed from Colorado) must also include the required compensation information, even if the job posting states that the employer will not accept Colorado applicants.
The laws in New York and Colorado follow on the heels of laws already on the books in other states, including California, Connecticut, Maryland, Nevada, Rhode Island, and Washington (and cities like Cincinnati and Toledo, OH). These laws vary in the amount of information that must be shared and with whom, and whether this information must be provided automatically or only upon request. For instance, the current law in California, which has been in effect since January 2018 and was the first of its kind, requires employers to disclose a salary or hourly range, not including bonuses or equity, but only upon reasonable request after an applicant interviews for a position. California has proposed legislation that would significantly expand the pay transparency requirements in its existing law.
The trend does not appear to be slowing down, as additional states, such as Massachusetts and South Carolina, are reportedly considering similar laws. Moreover, these state and local requirements build upon existing laws governing pay equity with which employers are likely familiar. The federal Equal Pay Act, for example, requires women and men in the same workplace to receive equal pay for equal work “on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.” Many states have similar laws or otherwise have pay-related provisions in their employment discrimination laws. Numerous states and local jurisdictions also have laws seeking to limit pay disparities by prohibiting consideration of an applicant’s salary history when making hiring decisions.
Savvy employers should take heed of this hot topic and ensure compliance with the various wage transparency and salary equity laws applicable to their jurisdictions. Multistate employers, in particular, should consult counsel for assistance with the differing requirements of the applicable pay equity laws in each state and local jurisdiction in which they have employees. If you would like assistance navigating these issues, please reach out to any member of the Troutman Pepper Labor and Employment team for guidance specific to your work locations and workforce.